Guam Incinerator Would Increase Rates: Utility Chairman

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Waste-to-energy proposal defended at hearings

By Gaynor Dumat-ol Daleno

HAGÅTÑA, Guam (Pacific Daily News, Dec. 10, 2014) – The proposed waste-to-energy contract that's before the Legislature would increase the cost of power to island ratepayers, said Simon Sanchez, chairman of the Consolidated Commission on Utilities.

Guam Resource Recovery Partners' proposed contract would sell power generated as a result of burning trash for 31 cents per kilowatt-hour to the government of Guam, Sanchez said.

"GPA makes power for 22 cents per kwh now," Sanchez stated. "Why would GPA pay more? ... It would increase power bills."

GRRP representative David Sablan said, based on his residential power bill, the total cost of GPA power now stands at 31 cents per kwh, and commercial and government rates cost even more.

"In our financial model, we use 23 cents per kwh revenue from the sale of electricity produced from the (waste-to-energy) plant," Sablan said.

"We're only off by 1 cent from Simon's figure, ... and 8 cents less than what households are paying for their kwh consumption," Sablan said, "and probably much less for commercial and government accounts."

GRRP's estimate of 23 cents per kwh, however, was based on a presentation before the Legislature in June this year.

In November, GPA implemented a reduction in power rate by almost 11 percent of the total bill after significant drops in prices of fuel oil in the international market, Pacific Daily News files show.

On top of the cost of GRRP's power from burning trash, Sanchez said, the contract also requires GovGuam to pay for the infrastructure to connect the waste-to-energy generator to the GPA grid.

"All GPA contracts require the generator of energy to pay the connection as part of their bid price," Sanchez said. "This could be another $10 million to $15 million that GovGuam pays."

GRRP's proposed project to burn trash to generate heat for electricity has been on and off public discussions for nearly two decades.

The late Sen. Ben Pangelinan, who died earlier this year, filed lawsuits to stop GovGuam from moving forward with the GRRP deal.

The issue resurfaced on Dec. 1 when Sen. Tina Muña Barnes introduced legislation that would ratify GRRP's proposed contract, which was negotiated with the Guam Economic Development Authority about a year ago. Within a few days of her introducing the legislation as Bill 433, Sen. Dennis Rodriguez's economic development committee had scheduled a public hearing on it.

Barnes hasn't responded to requests for comment from the Pacific Daily News, but some of her colleagues, including Sen. Tom Ada, chairman of the legislative infrastructure committee, have voiced concern that a project of that magnitude would be presented to the Legislature -- possibly for a vote -- with just two weeks left of the current senators' term.

GPA is on track to add renewable energy sources over the next several years, including a solar farm that would power up about 10,000 Guam homes. And renewable energy would be cheaper than the proposed GRRP contract, Sanchez said.

Ada has also voiced concern that GovGuam could end up being liable for $200 million worth of bond-borrowing that the proposed project would need.

Sablan has stated that GovGuam's involvement in bond issuance is merely an option and that the company can get financing on its own.

Guam law banned incinerators in 2000, but GRRP has stated that its license agreement with GovGuam predated the ban.

"GRRP's contract is exempt from the incinerator law because the law does not apply retroactively to GRRP's license and a statute designed to impair a contract violates the Contract Clause of the Organic Act and the U.S. Constitution," GRRP attorney Anita Arriola wrote in a recent letter to the Pacific Daily News opinion page.

Timing over the bill's introduction has been raised, and Sanchez raised it again in a statement to the Pacific Daily News.

"Why is it being rushed before Christmas, but not a word before the election?" Sanchez asked. "How is the public interest served by rushing approval now?"

Muña Barnes isn't expected to be present at a public hearing on her bill on Friday. She has sent a memo to senators that she would be off island that day.

GEDA has stated in a previous press release that GovGuam faced a $20 million liability if GRRP pursued with its claim for damages as a result of the delays in the execution of the contract.

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